" Sofimac Partners evaluates more than 150 business plans a year, and eventually finances around 10% of the companies with which it establishes contact "

“The first step in making an investment involves identifying solid companies with good growth and valuation potential. To this end, we use our network made up of our main regional subscribers, certain other private equity funds and various sorts of business consultants including statutory auditors, legal counsel and M&A advisers. The reputation we have earned at Sofimac over nearly 30 years allows us to capture a significant deal flow directly (nearly a third of the business plans we review). We also carry out targeted campaigns to identify companies and inform them of the advantages of opening their capital to outside investors.

“Once a need has been identified, we perform a thorough analysis of the company covering all aspects (management, products, markets and strategy) and reviewing historical and forecast financial statements and its financing needs. We frequently back up our own analysis with the views of outside sources by contacting, among others, clients and suppliers. We also conduct targeted financial, industrial and legal audits, and our final decision is systematically based on a compromise between a deal’s level of risk and the potential capital gain.

“Once the terms of the financial transaction such as the company’s valuation and the choice of financial instruments have been agreed on in collaboration with the company’s management, we present the project to a committee which provides an opinion. This committee comprises shareholders and/or subscribers and reputable business personalities.

“The final stage in the investment process involves preparing the legal documentation that accompanies each of our investments, including memorandums of agreement, shareholders agreements, etc. The shareholders’ agreement is the main document and defines the relationship between the founder/principals and the investors for the duration of the investment. It serves to protect both the investor, which often holds a minority interest, and management and defines the framework for cashing in on the investment, which takes place after five to seven years on average.

“The investment is monitored through regular contacts with company management within a framework of informal meetings or through the company’s management and supervisory bodies. The success of an investment depends on establishing a strong partnership between investors and managers. As a result, we take particular care in monitoring the companies we finance and assist them in their strategic thinking.

“Our exit may take many different forms –the sale of the company, a secondary buyout or an initial public offering.”

“Sofimac Partners evaluates more than 150 business plans a year, and eventually finances around 10% of the companies with which it establishes contact."

Emmanuel TISSIER, Investment Manager